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Panama Papers hold new evidence in dispute over Modigliani painting

By Robert CribbForeignJake BernsteinInternational Consortium of Investigative Journalists

Thu., April 7, 2016

Modigliani's 'Seated Man with a Cane,' worth an estimated $35 million, is at the centre of a dispute between a French retiree and a billionnaire family. (Provided by Maestracci family/Getty Images)

PARIS—He sits, perched at the edge of his chair, hands firmly resting on his cane, fedora slightly askew, drawing attention to his vaguely Chaplinesque expression. On either side are two adversaries, each claiming him as their own.

At stake is at least $35 million.

On one side of Seated Man With a Cane, a masterpiece by Amedeo Modigliani, is Philippe Maestracci, a retired Frenchman who claims the piece belonged to his grandfather before it was looted by the Nazis during the occupation of Paris.

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On the other, stand the Nahmads, a billionaire art family who are being sued by Maestracci for the return of the painting. The Nahmads first came to prominence as a banking dynasty of Sephardic Jews from Syria before emerging as high-profile players in the art world, owners of galleries in London and New York and conspicuousat art auctions where Picassos and Modiglianis are traded like baseball cards.

In New York court records, the Nahmads claim that Maestracci is going after the wrong people because the painting is owned, not by them, but by International Art Center (IAC), a company registered in Panama.

“Not anyone else in the world including defendants Helly Nahmad Gallery . . . Helly Nahmad . . . and Davide Nahmad” owns the painting, says a response filed last year by the Nahmads’ lawyers.

But leaked documents now being revealed in a joint investigation with the International Consortium of Investigative Journalists, CBC’s the fifth estate and the Toronto Star show the Nahmads have controlled IAC since 1995.

The documents, which include corporate registration records, shareholder certificates and correspondence, are among 11.5 million documents obtained by the ICIJ and German newspaper Süddeutsche Zeitung and shared with more than 100 other media outlets around the world and show the inner workings of Panamanian law firm Mossack Fonseca, which specializes in offshore incorporation.

In interviews over the past month, family patriarch David Nahmad and his lawyer have turned their defence from questions of ownership to question if Oscar Stettiner, Maestracci’s grandfather who was an art dealer in Paris during the 1930s and ’40s, owned Seated Man With a Cane.

“It’s not important to determine whether IAC belongs to me or not,” David Nahmad, who is identified as the sole shareholder of IAC on a 2014 company shareholder certificate, told investigation partner Le Monde last month in an interview in Paris.

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What is important, he said, is evidence about the painting’s provenance and Maestracci’s claim to it: “Everything turns on this detail.”

Nahmad said if he loses the case he will appeal and keep the issue before the courts for “10, 15 years.” Pressed further, he said if hard evidence emerges confirming Stettiner’s ownership of the painting, he would return it.

“I will not sleep at night if I know that I own a despoiled object. It brings bad luck. It’s an enormous crime. But if I know that it is not despoiled, then I cannot give it away to please someone who is dishonest.”

For his part, Maestracci, Stettiner’s sole living heir, told reporters at his home in La Force, France, last month: “I do (this) for the memory of my grandfather.”

Family patriarch David Nahmad, at right, says he would return the contested painting to the grandson of Oscar Stettiner if hard evidence emerged. Nahmad has been identified as the sole shareholder of IAC. (Arnaldo Magnani/Getty Images)

The dispute over Seated Man With a Cane, currently in New York court, offers a rare glimpse of how art ownership is concealed in jurisdictions that sell secrecy to the world’s wealthy. And as prices continue to increase dramatically — sales approached €51 billion (about $76 billion) in 2014 according to the TEFAF Art Market Report — the art market has become increasingly opaque.

Transactions are often obscured by offshore companies with nominal corporate directors with holdings in free ports, free trade zones and tax havens — the same dark corners of the global financial system inhabited by dictators, politicians, financial fraudsters and others who benefit from the anonymity, the leaked documents show.

The combatants in the Modigliani dispute were brought together by Mondex Corp., a controversial, Toronto-based stolen art hunter that assists clients in recovering lost works to which they have a claim — for a cut of the profits, reported to be as much as 30 per cent.

In 2009, Mondex had traced the Modigliani’s current ownership to the Nahmads — Giuseppe, who died in 2012, and his brothers David and Ezra and their two sons, both named Hillel. David and Ezra are worth an estimated $3.3 billion (U.S.) according to Forbes. Ezra’s son has the Helly Nahmad Gallery in London while David’s runs an identically named gallery in New York.

In February 2011, Maestracci’s lawyers wrote to the Nahmads asking for the return of the painting, contending it was in Stettiner’s possession before the Nazis occupied Paris. When they received no response, they filed a lawsuit in New York that October.

In an interview in New York with the CBC, Richard Golub, the Nahmads’ lawyer who also represents IAC, dismissed the evidence of the Nahmads’ ownership of IAC.

“Whoever owns IAC is irrelevant. The main thing is, what are the issues in the case, and can the plaintiff prove them at trial?. . . I don’t know what the document says and it doesn’t matter what the document says. . . I don’t know where you got it. And it doesn’t mean anything.”

Mondex president James Palmer, a Torontonian living in London, reviewed the documents and drew a different conclusion.

“They corroborate what we’ve believed for quite some time — that the family is owning and controlling the International Art Center,” said Palmer, in an interview with the Star. “That has serious implications.”

Both sides agree on this: There is no record, no smoking gun, that definitively proves the painting did or did not belong to Stettiner.

Art provenance research is “one of the most inexact sciences in the world,” Golub says. “I don’t think it belonged to (Maestracci’s) grandfather, and I don’t think he’s got a claim … and I think that we’ll prevail at trial.”

What remains, says Mondex lawyer Nancy Parke-Taylor, is a fight based on the weight of available evidence.

“In civil court, it’s more a balance of probabilities,” she says. “It’s not criminal court where you have to be sure. . . By no means is this a sure thing. But I think (the Nahmads’) antagonistic response will not hold them in good stead.”

The journey that placed Seated Man With a Cane at the centre of this legal fight is a metaphor for the modern art trade.

After Modigliani finished the painting in 1918, it disappeared for 12 years, reappearing in 1930 at the Venice Biennale exhibition where it was listed as Portrait of a Man from the collection of “sig. Stettiner, (Paris).”

This program has been cited as evidence by Mondex and Sotheby’s to support Stettiner’s ownership. But it isn’t definitive.

How, or from whom, Stettiner obtained the painting remains a mystery. And, as an art dealer, he could have shown the painting in his gallery without owning it, Golub says.

“Very often, the people who are in the provenances are not people that owned it,” he says. “Lots of dealers have paintings on consignment.”

Modigliani finished 'Seated Man with a Cane' in 1918. (NYT)

There are other fragments.

A letter dated April 14, 1930, to the Venice Biennale, written in French, refers to Stettiner as the “owner” of the painting.

In November 1939, as the Nazis closed in on Paris, Stettiner fled for rural France, leaving his art collection behind.

The German regime seized Stettiner’s assets, just as they looted Jewish properties and holdings in all occupied countries. On July 3, 1944, at Stettiner’s gallery, a French temporary administrator auctioned a Modigliani described as “a portrait of a man” that sold for 16,000 francs, documents show.

Maestracci and Mondex claim that painting was Seated Man With a Cane; the Nahmads say there’s no conclusive proof that the Modigliani painting sold that day was Seated Man with a Cane.

Two years later, the Nazis defeated, Stettiner returned to Paris and filed a claim to have the sale declared void and have the purchaser — a man named Van der Klip — or any subsequent purchasers return it to him.

A Paris bailiff, investigating Stettiner’s claim, interviewed Van der Klip who told him he had “entrusted” the painting to a man named Mariage eu de Saint Pierre, according to the bailiff’s account in a March 1947 court record.

Saint Pierre, the bailiff stated, said he had sold the painting in October 1944 for 25,000 francs to an American officer he had met in a Paris café. Saint Pierre didn’t know the American’s name or address.

“Consequently,” the bailiff’s statement reads, “Mr. Van der Klip declared to me that it was impossible for him to return the said painting.”

Stettiner would never see the painting again. He died a year later, in 1948.

No one, it seems, saw Seated Man With a Cane for nearly 50 years, until 1996 at an auction at Christie’s in London where it sold to the International Art Center for $3.2 million (U.S.), according to documents filed in New York courts.

Then, in late fall 2008, the painting reappeared at a Sotheby’s auction in New York where it was listed as Portrait of a Man (leaning on a cane). The auction guide listed it as between $18 million and $25 million (U.S.). Experts say it’s worth at least that much today, potentially more at auction.

And there was something new: The listing states that Stettiner was “possibly” the owner by 1930.

Despite its value and the artist’s high profile, it did not sell that night.

Julian Radcliffe, who heads the Art Loss Register in London, the world’s largest database of stolen and contested art, says the likely reason the Modigliani failed to sell is straightforward: a “taint.”

During an interview in his London office, an assistant pulls up Seated Man With a Cane in the registry’s database. The description includes that the painting is the subject of “ongoing litigation and is claimed on behalf of the Stettiner heirs as illegally dispossessed.”

“I would say it’s probably not saleable,” says Radcliffe.

A court win for the Nahmads wouldn’t solve the “moral” questions surrounding such a painting, he says. “People say, ‘Well, you might have won in court, but we feel sympathy for the Jewish family from whom it was taken. . . We don’t want to buy it.’”

Secrecy is intricately woven into almost every element of the international art world, from the purchasers of major works to the researchers who seek to determine their provenance.

The Mondex researcher who found the document that triggered the claim against the Nahmads is a quiet, bookish Parisienne with an art history degree and a background in anthropology. She spends her days digging through documents in archives throughout the city.

The Star spent a day with her tracing the paper trail that led to her discovery and then walked through the streets of Paris — the archives where she made her discovery and the addresses contained in those documents including the still standing building where Stettiner’s gallery was and the nearby flat where he lived before he fled in 1939.

Both sides in the dispute were brought together by Mondex Corp., a controversial, Toronto-based stolen art hunter. Seen is James Palmer, president of Mondex. (Lucas Oleniuk/Toronto Star)

We were asked to keep her name a secret. Mondex president Palmer says that disclosure could undermine her access to sensitive records in the archives. To protect her employment, we have agreed to withhold her identity.

Seated Man With a Cane was sitting in storage in the Geneva free port in 2009 when she stumbled on the document behind this dispute: Stettiner’s 1946 court claim alleging a Modigliani painting had been stolen from him.

In box 47W100 at the Archives of Paris was a document numbered 252 dated March 29, 1947, detailing an interview with Van der Klip about his purchase of a Modigliani looted from “Monsieur Stettiner.”

It was revelatory.

A bailiff ordered the immediate restitution of a painting signed by Modigliani and described as “a portrait of a man” to Stettiner, concluding that its sale amounted to a “dispossession.”

That record led to others that gradually pieced together fragments of Stettiner’s business dealings long since lost in the fog of war.

“It’s a bit like ghosts talking to you,” she says. “Oscar Stettiner has been . . . a silent partner, somebody who talks through documents silently for a long time now.

“I believe this painting belonged to (Stettiner). It seems obvious.”

Her discovery led to a call from Mondex president Palmer to Maestracci, telling him Stettiner may be the rightful owner of a Modigliani looted by the Germans.

“I’ve never heard about this Modigliani before,” Maestracci recalled in an interview. “When (Mondex) solicited me, I said, ‘Why not?’ I knew my grandfather was looted, but we left the past behind.”

They met in Paris in 2009 and agreed that Mondex would assist in returning the painting for a fee. The amount is secret and Palmer would not lay out the terms.

Hunting stolen art for profit is controversial. Opinions about companies such as Mondex are often polarized. They are considered to be either art world Robin Hoods or bounty hunters.

“What we have here is a bunch of thugs who are attempting extortion,” David Nahmad says, referring to Mondex. “It’s shameful.”

Palmer counters with his view of his work.

“We are not a charity, but we’re not a business that is just out there to make money,” he says. “If I could say, on a spiritual level, a personal level, a satisfaction level, it feels amazing to help someone, especially after such a long period of time. . . I’m Jewish as well, so I have all kinds of feelings about this. Myself, and my colleagues that we all work together, we are very passionate about doing right and about getting justice and about enjoying life and our lives and making things right.”

In February 2014, Maestracci’s lawyers abandoned their original claim in federal court for jurisdictional reasons and refiled in New York State Supreme Court. It refers to IAC as an “alter ego” of the Nahmad family, “in a manner so as to conceal and confuse their identities, and hide revenues generated by (the Nahmad family art enterprise) stemming from their art dealing.”

With the claim heating up, Golub’s office called the Panama office of Mossack Fonseca searching for someone to sign legal documents on behalf of International Art Center, the leaked documents show.

One of IAC’s official directors on the public record, Leticia Montoya, has her name on 11,000 other companies registered in Panama. Another, Katia Solano, identifies herself as Mossack Fonseca’s human resources director on her LinkedIn page.

Such so-called “nominee directors” are common in the world of offshore companies, said Nahmad lawyer Golub.

“Every Wall Street firm here in New York and every firm that does business in the financial world has nominee directors.”

Seated Man With a Cane is believed to be sitting in a vast warehouse in Geneva, neighbours with Van Goghs, Rembrandts, Chagalls, Matisses, Basquiats and Warhols — a free port where more than one million pieces of valuable art and other assets are kept, sold or bought by the wealthy, free from import taxes or duties.

It is legal. But it’s not without controversy because the system can be used to dodge taxes or launder money since inventories and transactions are not tracked.

“Here you have an opportunity for individuals, for companies, for governments to make so much money,” says Palmer. “You have people . . . being checked for a few hundred dollars at the airport and meanwhile these companies are doing billions of dollars, euros, pounds.”

According to international audit and consulting firm Deloitte, 42 per cent of art collectors it surveyed said they would likely use a free port. The biggest is in Geneva, a complex of storage facilities said to contain treasures to rival any museum in the world.

The current art market boom, and its connection to the secrecy zones within the global financial system, offers more evidence of the spectacular rise of the super rich.

“The single best driver of the art market is accumulated wealth in the world,” says Michael Moses of Beautiful Asset Advisors, which tracks art sales. “If high-end wealth is increasing at a faster rate than any other kind of wealth, which it is, these people have excess money to spend on art.”

Roughly half of all art transactions are private, strictly between sellers and buyers, estimates the TEFAF report. There is little public information about these sales. The rest take place at public auctions, which provide some transparency in regards to prices paid, but usually allow the identities of buyers and sellers to remain a mystery, Moses says.

The fix, says Radcliffe, would require all governments to agree on a single taxation rate on art to remove the incentive of hiding the wealth in free ports.

“The art market will need to find a way of regulating itself in the same sort of way as other financial markets,” he says. “It is, compared to insurance, banking and many other professions, it is loosely regulated. It is not transparent. And the standards, in some cases, are deficient.”

For the researcher who found the key documents that triggered the hunt for the proper owner of Modigliani’s masterpiece, there is value here far beyond the monetary.

“It seems a little bit unreal to me,” she says. “A lot of interests are at stake. I would like its history to become official again. I feel responsible for that.”

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